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Most reports have looked at how the NFL lockout will impact food and restaurant chains such as Buffalo Wild Wings (NASDAQ:BWLD), producers of sports- and NFL-related items such as Nike (NYSE:NKE) and Under Armour (NYSE:UA), and media companies including DirecTV (NASDAQ:DTV) and Sirius/XM (NASDAQ:SIRI). In this article, I review radio companies' exposure to the National Football League.

In an industry in desperate need of every last advertising dollar, many local stations can hardly afford to lose the revenue being the flagship station for an NFL team can generate. Not all stations, however, will lose out entirely if the NFL cancels the season, plays a shortened one, or opts to field replacement players.

Clear Channel (CCMO.PK)

Miami Dolphins
Cincinnati Bengals
Cleveland Browns
Pittsburgh Steelers
Denver Broncos
San Diego Chargers
Minnesota Vikings
Tampa Bay Buccaneers

CBS Radio (NYSE:CBS)

New England Patriots
Houston Texans
Oakland Raiders
Dallas Cowboys
New York Giants
Philadelphia Eagles
Chicago Bears
Detroit Lions

Cumulus/Citadel (CMLS, OTC:CDELA)

Buffalo Bills
Tennessee Titans
Kansas City Chiefs
San Francisco 49ers

Disney's (NYSE:DIS) ABC Radio holds the rights to New York Jets' games. An Entercom (NYSE:ETM) station carries New Orleans Saints' games, and Emmis Communications (NASDAQ:EMMS) broadcasts Indianapolis Colts' games. Private companies, including Bonneville International, Cox, Red Zebra, Hearst, and Greater Media, hold the broadcast rights to the NFL teams not listed above.

Potential Impact

I don't believe radio companies will experience any significant hit to their overall bottom lines as a result of an NFL lockout. While Clear Channel notes in its most recent annual report that not renewing sports contracts contributed to a significant decrease in direct operating expenses, increasingly these agreements between flagship stations and sports franchises do not involve hefty rights fees. Instead, the parties tend toward revenue sharing arrangements. For instance, the team uses it own sales force to sell not only radio inventory, but other promotional opportunities to a client, such as stadium signage. Under these pacts, the team stakes claim to as much as 97 percent of radio inventory during a broadcast. The local station gets to sell about 3 percent of the ad time. In a market the size of Dallas-Fort Worth, for instance, this could amount to approximately $750,000 to $1,000,000.

The hit to radio will most likely be seen at the local level. As Cumulus Radio Dallas Operations Manager Jeff Catlin told me, local stations that draw sports fans will feel the ratings impact of no football training camp, no preseason games, and, potentially, no or fewer regular season games. Catlin points out that "the water cooler, fringe fan who typically turns on a sports station the day after" a football game likely won't in the absence of NFL activity. This will probably translate into a significant ratings hit, particularly during the fall, for stations that rely on the casual football fan to boost their numbers.

Interestingly, the bigger the market, the greater the likely impact. In smaller markets, losing one ratings point means much less than it means in highly competitive cities like New York, where dropping by a few tenths of a point can take away millions in revenue. That said, local stations in cities of all sizes will feel the pinch.

For instance, the Kansas City Chiefs' flagship station KCFX-FM ranked #1 among all listeners in the market during the football season, but dropped to third in the most recent January 2011 Arbitron (NYSE:ARB) ratings*. Despite this drop, it likely will not experience the magnitude of decline in revenue, New York Giants' flagship WFAN might if it dips by half a rating point -- like it did after this past season -- without football. And as Catlin explains, it's not just stations with broadcast rights that feel the pain; all stations that rely on football to drive listeners to their programming will lose market share, which, ultimately, translates into lost revenue.

*Ratings accessed via free subscription at the All Access Music Group.

Source: Terrestrial Radio's Exposure to the NFL Lockout